THE FIXER
AUGUST 8, 2000
BLACK ENTERTAINMENT TELEVISION,
W STREET NE, WASHINGTON, D.C.
The setting was beyond unlikely; it was bizarre. Ten days after losing all his financial backing, a day when Motorola issued its tenth “final de-orbit deadline,” Dan Colussy pointed his Porsche toward the mean streets of northeast Washington, D.C. It was a part of the capital rarely seen by tourists, comprising forgotten neighborhoods like Ivy City, Brentwood, Langdon, and Brookland that were centers of genteel social life in the nineteenth century, but had since turned into scarred, pockmarked war zones full of iron-gated strip malls, trash-strewn streets, and abandoned houses. These were the forbidding parts of the inner city where gunfights were related by the Washington Post in two-sentence summaries and where the crack cocaine trade had boosted the District of Columbia into America’s murder capital. But it was here, in the ghetto, that some very strange bedfellows were gathering to determine the future of Iridium. Colussy and two other men were wending their way to the office of Bob Johnson, founder of the Black Entertainment Television network. Johnson’s executive suite sat high atop the BET studios, located in a lonely section of Brentwood noted mostly for its railroad yards and for being in a slough where residents’ basements regularly filled up with water from flash flooding. With a postal sorting facility as one neighbor and a sketchy McDonald’s as another, BET headquarters was cut off from the reality of the streets by high security walls. Beyond the gate, it was like entering Oz: rising skyward was the gleaming mirrored facade of a ninety-thousand-square-foot pin-striped tower set in an immaculately landscaped campus. Colussy parked his car in one of the VIP guest spaces and was soon ascending to the opulent office of the charismatic dealmaker who had launched BET in 1980 and built it into a media empire traded on the New York Stock Exchange. Bob Johnson wanted to help. Bob Johnson, a friend of every President since Carter, could get to the people involved. Bob Johnson had information from Jesse Jackson and, more important, from the President. Bob Johnson was about to put Colussy’s quest back on track.
How Dan Colussy became intimately tied to the black power structure of Washington, D.C., was a lesson in long-shot networking. Colussy had first met with some African American businessmen in April after Dorothy Robyn passed along their names as part of “the Jesse Jackson group.” Colussy was talking to anyone and everyone who had the remotest interest in helping him, so he arranged a meeting almost immediately. Colussy was skeptical of their Third World business plan, but he liked all of them personally, especially Herb Wilkins, a big, somber grizzly bear of a man who was known in D.C. as the first investor in the Radio One syndication network and the owner of cable TV franchises in major cities across the country. Wilkins and his partner, Terry Jones, were both Harvard Business grads who had met in the late seventies and scraped together money from the Ford Foundation, the Office of Economic Opportunity, the Presbyterian Church, and Aetna Insurance to form a company called Syncom Capital devoted to minority-owned media investments.39 What the two friends raised was a mere pittance—only $1.75 million—but since then they had invested in more than 150 companies with a combined market value in the billions, and most of those companies were devoted to media ventures in inner-city neighborhoods not unlike Boston’s Roxbury, where Wilkins had grown up in a large, close-knit family in a housing project next door to St. John’s Episcopal Church, where he spent most of his free time as a boy.
Wilkins was a man on a mission—a mission inspired by affirmative action programs that had taken him out of the inner city and put him through Boston University and Harvard Business. The turning point in his life came when he took a course devoted to what was considered a new concept at the time: the venture capital fund. The idea of putting together an investment fund that would dole out start-up money to promising but high-risk businesses seemed to Wilkins exactly what the black community needed. It was, in fact, the only way he could envision any kind of future for black entrepreneurs, since the very fact of their being black meant they were classified as high risk. A year after his graduation in 1968, he convinced Bache & Co. to back a $10 million venture capital fund devoted to minority businesses, but Bache reneged when the stock market “went sour.” By 1973 Wilkins had become a senior investment advisor at a firm financed by J.P. Morgan and Morgan Stanley, but their idea of a minority investment was a white firm with black corporate managers, which angered Wilkins as it seemed to him patronizing. “They were turning down the deals I brought them in a very sarcastic fashion,” said Wilkins. Tensions built until Wilkins abruptly quit in February 1975—“the best thing that could have happened to me,” he would say later. He would no longer ask white men to finance black businesses. He would raise the money himself. And so Syncom was born.
Syncom specialized in taking over ventures that the mainstream business establishment had abandoned or avoided, the most notable being the cable television franchise in Newark, New Jersey, where white businessmen feared to tread. Wilkins and Jones built out a cable system there that became much more profitable than the systems in wealthy suburbs that were considered more desirable by the media tycoons of the day. “We knew our audience,” said Jones. “The traditional model for making money on cable TV was to go into a high-income suburb and get 30 to 40 percent penetration at $19.95 a month. But in those suburbs, there are only 80 to 100 homes per mile. In Newark, there are 350 homes per mile. We could make twice as much money with 10 percent penetration. Yes, the construction costs are higher, and yes, the collections have to be done a different way—you need a lot of cash windows on payday—but for low-income families cable TV is often the only entertainment they can afford, so demand is very high. Blacks and Latinos overconsume technology. Fortunately we knew this. Unfortunately, the companies we tried to partner with simply studied our business model and stole it.”
Despite their bruising battles with media conglomerates, making it impossible for them to grow as rapidly as they would have liked, Wilkins and Jones were often profiled as being among the most successful African American entrepreneurs in the country. That’s why they were approached in 1993 as potential investors in Iridium’s African gateway. Jones was intrigued by Iridium even then. A small-town Kansas native with a master’s degree in biomedical engineering from George Washington University, he had grown bored during his first jobs out of college with Westinghouse and Litton—“I realized I wasn’t an engineer,” he said—then spent four years in Kenya in the seventies, creating Kiambere Savings & Loan and several other East African businesses that eventually had to be abandoned for reasons he blamed on weakening currencies and endemic corruption. While living in Nairobi, he met his future wife, an organizer for a Chicago-based nongovernmental organization called the Institute of Cultural Affairs, and when they got back to the States, Jones went to work for the Booker T. Washington Foundation for Excellence, trying to obtain minority-owned cable franchises in major markets. That’s how he met Herb Wilkins, who had just formed Syncom.
The two men pooled their resources and were soon investing in FM radio stations, cable, and any other media property that seemed to have value overlooked by the mainstream. Wilkins hated taking money from the government—it led to invasive regulations, limitations on how much you could pay people, and constant oversight by bureaucrats—but was coaxed by Jones into facing reality and realizing minority contracts were a resource they couldn’t afford to ignore. Syncom ended up relying on several federal programs, essentially increasing the capitalization of the company fivefold because of its ability to borrow, but all that money came with strings. “We’re making money,” Wilkins would tell friends, “but at every turn we’re hamstrung on what we can do.” He spent enormous sums on lawyers who did little more than fill out government reports. He had to get permission to reinvest his profits, and that could take years. He was often drowning in “arbitrary and unnecessary” paperwork required by local governments. He resented being “constantly asked to do what is socially significant instead of what is economically important for success.” But he never wavered from one core belief: black people should sell black products into black markets. He was convinced that was the way to solve the problem of perpetual black poverty. It was not a popular view, even among many of his friends who spoke about “integration into the larger American economy.”
“That’s Republican laissez-faire bullshit,” he would shoot back at them.
Meanwhile, Jones remained tied to the African continent by serving on the board of the Southern African Enterprise Development Fund, an agency run by Andrew Young that was empowered to dispense $100 million in USAID funds to “newly democratized” countries. That’s how Motorola found him when it went looking for early partners. Though sentimental about Africa, Jones and Wilkins turned down the deal. The Iridium phone seemed to Wilkins a high-end toy for rich people, and the start-up costs for the gateway seemed excessive. It also seemed like an example of rich white men coming after poor black money, and Wilkins insisted above all that the black business community hang together. “The black middle class can’t go home and enjoy the fruits of the labor they have supposedly earned by their own initiative,” Wilkins told his colleagues, “while leaving that kid in the ghetto unable to compete.” So there were a lot of reasons Iridium didn’t fit Syncom’s objectives in 1993, but the two partners continued to follow the ups and downs of the company, and when it started to issue junk bonds, Wilkins even bought a few with his own money. It was only after Iridium started making headlines in 1999 as a spectacular business flameout that they looked at it again.
“We were sitting around waiting for a partners meeting to start one night,” recalled Jones, “and Iridium came up and Herb said, ‘We ought to buy it.’ And we all broke out laughing.” Iridium was a $6 billion company, whereas Syncom was virtually unknown at those levels of American business—and yet the more they looked at it, the more it seemed not that different from what they had done with cable TV. The big boys at Iridium had targeted the wrong customer—rich business executives—and ignored the millions who had no alternative service. “We’re into the underserved,” Jones said. “That’s what Syncom is all about. It can be old people. It can be marine vessels. We always had limited capital, so we have to see the gold in the hills that others missed.” Bringing telephones to Amazonian outposts and tiny Indonesian islands didn’t seem that different from bringing cable TV to neglected inner-city neighborhoods. They thought, at the very least, that they could be a minority investor with a bigger partner, and that they could open doors in Africa and Latin America that others might have trouble penetrating. They cautiously started looking at the numbers, and when they mentioned it to Bob Johnson, the idea started making its way through the black power establishment, eventually reaching Jesse Jackson, who buttonholed President Clinton at a White House party. Within days the idea of “a Bob Johnson bailout of Iridium” had percolated through the White House, and allies at the FCC even agreed to “exercise leverage” over Motorola so the new coalition would have time to put together a business plan. Less than a month later Ty Brown, Herb Wilkins, and Terry Jones were settling in for dinner at the venerable Metropolitan Club as the guests of a guy named Dan Colussy.
Now, ten weeks after that dinner, Castle Harlan had announced to the world that Iridium wasn’t worth investing in. Colussy’s money was gone. His credibility was gone. His business plan was portrayed publicly as toxic and misguided. But Colussy remembered Herb Wilkins. He remembered Wilkins as the silent, hulking presence at every due diligence meeting he’d attended. He remembered Wilkins as forthright, honest, good as his word, following through on everything he said he would do. He remembered Wilkins swallowing his pride when he attended Castle Harlan meetings in New York, only to be stung by dismissive remarks indicating that “the black guys” were only grudgingly tolerated on Fifth Avenue. Colussy hadn’t noticed the snubs himself, but he had to admit that, yes, that was just the kind of thing that might happen at a company run by John Castle. Even if it wasn’t overt racism, it wouldn’t be surprising for a Washington, D.C., minority-owned firm to be treated as a lightweight junior partner. But now Castle Harlan had been even more overtly rude to Colussy, and Herb Wilkins started to feel the kind of bond you feel when you’re kicked out into the alley by a bouncer and notice that someone else has been kicked out with you. It was a bond that would turn out to be crucial for the future of the satellites.
The day after the bombshell Castle Harlan announcement, Colussy’s phone had gone quiet. People had seen the newspapers. Iridium was dead. Craig McCaw had pulled out in March and now John Castle had pulled out in July. Obviously the whole satellite phone thing was a white elephant. The sole exception was a woman named Ginger Washburn, a Motorola sales and marketing veteran who now worked with a service provider in Austin, Texas. She was apparently oblivious to the fact that the financing for the deal had fallen through, and she called Colussy to tell him that several Alaskan Indian tribes were in love with the Iridium phone, perfect for use on their remote reservations above the 65th parallel, and that they might want to invest. A day earlier Colussy would have penciled in her call on a list of potential revenue sources for Jonathan Mark’s due diligence report, then forgotten about it. Now he eagerly took down the information and told her he would call back. He doubted any Indian tribes in Alaska had $100 million, but miracles do happen. And he needed one.
If Colussy had known what was going on at the White House, his depression might have turned to despair. When Colussy’s name appeared in government documents, it might be spelled “Colucci,” “Kaluchi,” or “Colussi,” the partner of “Stan Kapalla” in a project backed by “Castle Harwin.” This was because the only names that mattered among the handful of people trying to save Iridium were John Malone, Craig McCaw, and John Castle. Once they were gone, Dorothy Robyn got on the phone with Iridium lawyer Tom Tuttle to find out how much time there was for plan B—Colussy acting on his own—but Tuttle was pessimistic. “It would be nice for the Iridium estate to have ten to fourteen days to patch together a deal,” he said, “but Motorola is not going to wait because they feel like they keep getting sucked in. Iridium can’t object to a de-orbit because of the legal issue of who bears the costs. It’s a $40 to $50 million issue and the creditors don’t want to be responsible—they want that on Motorola. Fortunately this judge does not want to de-orbit. But Motorola has taken this all the way up to Chris Galvin and they want it to be over, and the banks may be feeling the same way.”
Robyn then called Ty Brown, the lawyer for “the Rainbow Coalition guys,” and asked him if there was still hope for a deal—but he, too, was downbeat. “Castle Harlan wouldn’t work with us,” Brown told her. “Herb Wilkins even told Castle Harlan, ‘I’ll guarantee the revenue,’ but they weren’t interested.”
What about the international aid organizations he was pitching? “Their response was ‘We can’t commit until we know the system will be there,’ and it’s a nine-month budget process.”
Robyn was barely starting to process all this gloom when she heard that the Department of Justice was preparing press releases to deal with the possibility of public panic. She warned the lawyers to hold off, reminding them that Motorola still had to coordinate with NORAD, and it also had to produce the proof of insurance it promised back in March. Almost alone among government employees, Robyn refused to admit the battle was over. She came into the office on the weekend to send out a “bad news” e-mail to everyone involved in the Iridium situation, hoping to control the panic—and Gene Sperling noticed.
Clinton’s top economic advisor, and Robyn’s boss, scribbled across the e-mail: “We need to do last minute assist—is there anytg fed gov can do?” Come to his office, he said. Let’s get going on an Iridium salvation plan. Let’s start fresh Monday morning.
On that same Sunday morning, the time Dan Colussy usually reserved for making notes to himself, he, too, underwent a sea change in his thinking. After going over all the possible ways to deal with the situation, he took out a fresh legal pad and made a list of potential investors:
It was a fantasy fund-raising list. Those wishful-thinking numbers beside each entry were millions, of course, but the only principal at those companies he’d actually spoken with was Wilkins. Malone and Johnson had already bowed out—Colussy was just holding out hope that Wilkins could execute some kind of last-minute turnaround in their thinking. Boeing, on the other hand, seemed like a natural investor since its rockets had been used to launch much of the constellation and it stood to make ongoing profits from a contract to operate the system. Colussy did know the Chief Operating Officer of Boeing, Harry Stonecipher, from his days as a defense contractor—but so far his old friend was not returning his calls. “Alaska” was the recently discovered Alaskan Indians, and Colussy had them down for $40 million, so obviously he wasn’t in complete possession of his faculties yet. But the key entry came on the last line of the legal pad.
“By the end of the week,” Colussy wrote, “I need to have a new company.”
But there was still one place where the dramatic Castle Harlan exit couldn’t be avoided. On Monday, July 31, Judge Cornelius Blackshear of the Southern District of New York U.S. Bankruptcy Court settled into his sizable chair behind his sizable bench in his ornate courtroom facing Bowling Green at the foot of Manhattan Island. He was expecting to hear the final offer of Castle Harlan. All summer long there had been a steady stream of lawyers to the old customhouse, many of them nominal buyers, most of them creditors, but now Blackshear was startled to find just five people in his courtroom. There were two lawyers for Motorola, one lawyer for Iridium, one lawyer for Chase Manhattan Bank, and one lawyer from Baltimore representing Dan Colussy. Something had obviously changed. So Blackshear’s first question was “Where is counsel for Castle Harlan?” The Motorola lawyer quickly stepped up, telling Blackshear that Castle Harlan was no longer interested and therefore the case had returned to the same place it was five months previous. There were “no qualified bidders” and the de-orbit of the Iridium constellation should be allowed to commence.
Fortunately Blackshear was seasoned, skeptical, and rarely impressed by the first thing he heard out of a lawyer’s mouth. Knowing he would get a lot of posturing in open court, he invited the lawyers into his chambers and, off the record, asked them the equivalent of “What the hell is going on here?” Isaac Neuberger told him the media had it wrong, the Castle Harlan withdrawal had been a minor event, and that Colussy’s consortium of investors was prepared to buy the satellite constellation with or without the help of an investment bank. The judge didn’t hear anything that gave him confidence in what Neuberger was saying, and he was not in the mood to let the case drag on much longer, but he considered the satellites such valuable assets that he decided to give it one more try. He told Neuberger to get back to him with a concrete proposal and prove he had the money, and get back to him quickly. When Motorola’s lawyers objected, he told them he couldn’t do anything to prevent them from destroying the constellation, since Iridium was no longer objecting to it, but he appealed to their common sense. Those sixty-six satellites were worthless unless they were orbiting the planet—Motorola shouldn’t do anything stupid if there was even a remote chance of a sale. Motorola agreed to wait, but only forty-eight hours. The hearing concluded on a decidedly dismal note. Hurry, the judge told Neuberger.
The brief hearing was widely seen as the death knell for Iridium, especially since the press treated it that way. “The events yesterday effectively end the tumultuous, under-achieving existence of Iridium,” reported the Financial Times. For the first time, Motorola had a green light to de-orbit anytime they felt like it, without having to go back to court. Dr. Hans Binnendijk, the most senior analyst at the National Security Council, informed National Security Advisor Sandy Berger, and Berger prepared to inform the President. Colonel Victor Villhard in the Office of Science and Technology Policy and Bretton Alexander, his space policy analyst, put their “inform the public” plans into overdrive and circulated a draft news release.
“For the complete Iridium system,” it read, “there is a 1 in 250 chance that some person on Earth would be struck by debris. Thus the risk of an accident is not insignificant, and if a de-orbiting satellite hit a population center, the level of damage could be substantial.”
This was too much for Dorothy Robyn, who became alarmed that they would panic the public before the de-orbit was even a certainty. “Just be careful not to get ahead of the process,” she told Villhard. “There’s still an active effort on the part of Dan Colussy and others to get the funds to keep the system in operation.”
Two days later Robyn and Mike Greenberger at Justice presided over a meeting requested by Motorola. Oddly enough, the request for the meeting came not from the executives in Schaumburg or the government affairs people in D.C., but Dannie Stamp at the Chandler Lab. “Everyone was gone on the technical side except me,” said Stamp—and so he had been charged with getting the system ready for the de-orbit. “But I had all these technical approvals I had to get from various agencies and I couldn’t get these blokes in Clinton’s office to coordinate it for me, I couldn’t get any one person to say, ‘Okay, fine, you’re clear.’ So I went to DOJ to get all of Clinton’s minions together.” Stamp’s idea was to gather in one room everyone who had authority over Iridium—at the Pentagon, the FAA, the FCC, the State Department, the Commerce Department, the Department of Transportation, and the Justice Department—and get an unequivocal statement from the government that a de-orbit was legal. Robyn saw this as an opportunity to delay the process, but Greenberger was downbeat: “We don’t have a very good story to tell.” Robyn and Greenberger went over all the insurance issues but didn’t think they could get any more mileage out of that. They considered buying time by telling Motorola that its press statements were misleading and it needed to coordinate with them on that. Ultimately, they simply asked Motorola to delay the de-orbit until August 16—another two weeks—in order to give the government time to inform everyone. The way Robyn worded it to Bruce Ramo, the Motorola lawyer, was that “you’ve been very cooperative and we don’t think that, ultimately, we will stand in the way if there’s no deal, but we need a little more time to talk to our principals. It’s in your interest to have the government stand down, and your de-orbit is too soon.”
Greenberger went further with Ramo, saying, “Having the U.S. government be able to stand down on this would be very helpful. Conversely, we don’t want to have to seek an injunction. I’m not saying we would do that.” Perhaps where persuasion didn’t work, an implied threat would.
Neither Robyn nor Greenberger was surprised when Motorola, impressed by neither argument, refused to commit to any more delays.
Back home in Maryland, Colussy took the call from Neuberger, reporting on the judge’s comments, and knew he was out of time. He called Herb Wilkins and said, “Herb, I need to know what you can do right now.” And Wilkins came through. He had always thought he would be the junior partner of Castle Harlan, or Bob Johnson, or John Malone, but he was angry about how this whole thing was coming down and he stepped up. He said he could raise $25 million in seventeen days and could pledge another $25 million for later. But that was all he had. Colussy’s research now indicated it would take $84 million to run the system for a year, plus $50 million to $100 million to purchase assets owned by Motorola and Iridium. If Colussy ran everything on a shoestring, the total bill for year one still stood to be $200 million, and he didn’t know where that would come from.
Fortunately Wilkins, who had sat like a silent Buddha at most of the due diligence meetings, now became proactive. Wilkins picked up the phone to call Ty Brown.
“Ty, you’re not gonna believe this,” said Wilkins, “but for the first time in my life, I’m gonna back a white man.”
Brown was indeed stunned. Brown had known Wilkins for twenty-five years, since the late seventies, when Brown was a commissioner at the FCC and Wilkins was a hustler trying to land cable franchises, and the two men had become even closer friends while both were serving on the board of BET. Brown knew Wilkins as a man who had deep-seated resentments toward the white business establishment. Herb Wilkins avoided doing business with any white people, much less financing white-run ventures. Just the mention of John Malone’s name could send Wilkins into outraged rants, as he believed that Malone had pretended to be a loyal partner, only to steal his business plans and contacts.40 But Brown also knew that Wilkins had built a small media empire backing start-up companies that no one else cared about. He had put up the money for the most successful black radio network in America at a time when the founder was still operating out of her basement. In the early nineties, when you still needed a credit check to own a cell phone, Wilkins and Brown had figured out a way to provide phones to people in the inner city who didn’t qualify. “If you wanted to get something done,” said Brown, “show Herb Wilkins a situation where there’s a service or a product available to the haves and not the have-nots. He would always say, ‘Throw me in that briar patch.’” Since that partners meeting when they joked about buying Iridium, Wilkins had turned fierce in his position. Ty Brown, in fact, had been one of the first people he called once he got the fire in his belly, and Brown still remembered the earlier conversation.
“Motorola is getting ready to deep-six Iridium,” he had said.
“Why not?” said Brown. “It’s a piece of junk.”
“No, it’s not a piece of junk. I want to buy it.”
“What will you do with it?”
“It’s a telephone system for the Third World. We gotta fight for it and we want you to be the lawyer.”
Brown knew that Wilkins’ instincts were rarely wrong.
“I don’t wanna be the lawyer,” said Brown. “I wanna be a partner.” And so WorldTel was born.
Colussy remained unimpressed by the whole sub-Saharan angle. He had vast experience dealing with African governments—Ugandan dictator Idi Amin once put out a contract on Colussy’s life after he canceled 747 service out of Kampala—and he knew that any government deals would be hard to acquire, harder to maintain, subject to nepotism, impossible to enforce, and likely to be attached to kickback schemes that were illegal for an American company. Then there was the fact that Africa hadn’t shown much interest in Iridium the first time around. Fully 41 percent of the Iridium users in Africa were in the mining industry, and most of those probably weren’t even African. Still, he had to pay lip service to Iridium as “the ultimate solution for the Third World” since that’s what people like Jesse Jackson and Bill Clinton wanted to hear.
Meanwhile, Mark Adams was checking with his Pentagon spies every day, and he called to say that Motorola was now trying to give Iridium away. Nick Negroponte, founder of MIT’s renowned Media Lab and a Motorola board member, had called Dan Goldin, the administrator of NASA, to ask if there was any way Motorola could simply donate the system to the government for civilian use. NASA turned the gift down, having no budget for operations and no real use for it. Running out of easy options, Motorola decided to give Colussy one more chance. “Come to The Tower, let’s talk,” said Keith Bane. “Come to The Tower,” said Ted Schaffner. The Motorola executives wanted this to be over, and they wanted it to be over now.
As Colussy boarded a flight for Chicago on Tuesday, August 1, he carried a prospect sheet that had exactly one confirmed name on it: Herb Wilkins. Everyone else was vague to the point of being infuriating. Ed Cerny and Tom Sperry, two investment banker types at UBS Warburg who worked for Prince Khalid, called to say they heard rumors that Craig McCaw might still want in on the deal. They were implying that the Prince might invest, too, but only if “someone major” like McCaw were involved. Colussy was skeptical of McCaw since he’d come and gone so many times, but he still thought there might be a shot with another “someone major”: Boeing. The senior Boeing executive involved with the Iridium launches was a man named Don Hull, and he had been very helpful when Colussy was doing his due diligence in Arizona, so Colussy called Hull to find out why Boeing COO Harry Stonecipher was not returning phone calls. It took about five minutes for Hull to get the answer: the company wanted no part of an equity investment in Iridium. Boeing had already gotten involved in the stillborn Ellipso project and then pumped $100 million into Teledesic for a 10 percent stake, and it now looked like all that money was up in smoke. The company would no longer be buying any equity in satellite ventures. Meanwhile, Ginger Washburn kept calling to say she was sure the Alaskan Indians would invest, but Colussy didn’t really have time to fly to the Arctic Circle to talk to them unless he could be certain they were real.
In combing back through the original Iridium investors, two prospects seemed most likely. Carlton Jennings, an American who had been CEO of Iridium South Pacific in Australia, was a fast-talking sort who kept referring to the licenses he controlled (including the “island kingdoms” of the South Pacific), saying he wanted in—maybe not at the $50 million Syncom level, but at some level. Jennings was a former employee of Motorola, hired by Jerry Adams in 1994 to find investors in Asia because of his experience in Japan, Australia, and New Zealand. Colussy told him to get his checkbook ready and optimistically penciled him in for $25 million. Another promising lead was Kazuo Inamori, the Japanese tycoon who had founded Kyocera Corporation in 1959 as a ceramics manufacturer, then turned it into one of the most powerful electronics companies in the world when ceramics turned out to be ideal for semiconductors and cell phones. Kyocera had been an investor in the original Japanese consortium and had built handsets for the service—handsets universally considered superior to the ones built by Motorola—but the Japanese had been especially stunned when Iridium went bankrupt, since they had invested $581 million, making them the largest shareholders after Motorola. Now, thanks to overtures by Tom Tuttle, the courtly Japanese magnate said he was open to a meeting during his upcoming visit to the United States. Colussy decided to treat all these potential investors as solidly “in”—at least while he was talking to Motorola—but he knew he needed to get some real commitments within a matter of days or else the whole thing would crumble into dust.
Colussy got another big surprise when he touched down in Chicago—a new date for crashing the constellation. Motorola had issued a press release this time, announcing that the satellites would come down on August 9, eight days away, and it had already hit the Chicago Tribune in a story headlined “Burn-up of Iridium Satellites to Begin.” It was one thing to ignore the pleas of Judge Blackshear, or bluff “de-orbit deadlines,” but going public with it? Why did he even bother to fly in? (The only satisfying part of the Tribune story was that it referred to Castle Harlan as an “asset stripper” and “buyer of last resort.”) Colussy decided to ignore the news—it would just sidetrack his ability to get anything done—and drove straight to The Tower, where he and Schaffner instantly plunged into a meeting about insurance issues. Meanwhile, in another part of the building, Motorola spokesman Scott Wyman was telling the Dow Jones News Service that the satellites would be destroyed “as soon as possible.” At the end of the day, Colussy was nervous. When he left The Tower, the August 9 deadline was still in place. The only thing that could dislodge it was an agreement with Boeing—an agreement that Boeing had already ruled out. Motorola made it clear: he had exactly one week.
Meanwhile, in Washington, the Iridium Interagency Working Group had given up on Motorola and was preparing for de-orbit. Staffers dusted off the government press announcement that had been circulating for four months, saying that a) they were not government satellites, b) de-orbiting was an imprecise science, c) there was a slight possibility that some debris would reach Earth with a “minuscule” risk of casualties, and d) the government was monitoring the situation. When it came to the actual risk-of-casualty statement, they chose new, even more confusing language: “NASA calculates there is less than 1 chance in 18,000 that any person on Earth will be hit by debris from each Iridium reentry and that there is less than a 0.5% chance that any person on Earth will be hit by debris as a result of all 74 Iridium reentries.” The eventual press document ran to dozens of pages of “if asked” responses to theoretical questions from the media. It didn’t help that since the whole Iridium mess began, a 70-pound piece of debris from a Delta II rocket had landed on Pieter Viljoen’s vineyard in Worcester, South Africa, and a 110-pound metal ball from the same rocket had landed on a farm in Durbanville.
Once again Colussy bunkered down in his wood-paneled office overlooking the Severn, immersing himself in phone calls at all hours of the day and night, frequently getting up at three or four in the morning to write notes to himself. Helene—sensing a work mode to end all work modes—sharply abbreviated their social calendar and did her best to make it easy for him to take meals in his office and run what had become the Iridium war room. Even at this late date, he couldn’t always tell the real from the unreal. A man named Keith McNerney called from the West Coast representing Venture Partners, the company run by Gene Curcio from the Los Angeles suburb of Rolling Hills Estates. McNerney now claimed to have $350 million in committed funds. Lockheed Martin and General Dynamics were both involved with the deal, McNerney said, and General Dynamics had agreed to run the constellation for $5 million a month. Frank Morton, a descendant of the founder of Morton Salt, was investing as well. Maybe, McNerney said, Colussy wanted to join them instead of fight them.
Even though he was desperate for financing, Colussy had a sense that Curcio had nothing to offer. He asked a few questions and told McNerney he would call him back, but McNerney apparently interpreted this as a snub. The next day Curcio turned hostile, sending a letter to the Iridium board of directors calling Colussy “a Castle Harlan splinter group” that is “neither operationally or financially capable of acquiring the satellite assets or indemnifying the Iridium estate.” Curcio went on to say, “I have spoken to Boeing Corporate in Seattle, and I can assure you that Boeing has no intention of operating a satellite system, nor will they foot the bill, and they certainly will not indemnify Iridium.” The only thing that gave Curcio any credibility at all was the letter he had produced from General Dynamics. Apparently General Dynamics executives had gotten wind of Colussy’s deal with Boeing and were simply taking a competitive position so that, if Colussy failed, they might be considered in line for the operations contract.
Curcio was right about one thing, though. As of August 4, Colussy was not yet “financially capable.” That’s why the team was spending 24/7 on finding money. Ed Staiano called to say that Bain & Company of Boston might be interested in investing. Colussy was skeptical—that was the firm that Jonathan Mark had come from, and it was indeed an “asset stripper.” Mark Adams called with bad news from the Pentagon. Art Money, the Assistant Secretary of Defense for Command, Control, Communications and Intelligence, was the key official with the portfolio for Iridium, and he was only lukewarm about whether the military needed it at all. Then more depressing news from Motorola: the board of directors had met the previous day and drawn a line in the sand. Either “total indemnification from Boeing” or else the satellites would be destroyed. Staiano called to make the bad news worse: Motorola had sent out an official letter to all employees, saying there were no buyers for Iridium and that the constellation would be de-orbited. For some reason the company not only wanted to get rid of the satellites, they wanted to be as public as possible about it.
And then Colussy’s caller ID lit up with the last name in the world he expected: John Castle.
Castle was calling from the Harlem River Drive in Manhattan, on his way to work, and he had just gotten off the phone with Prince Fahd, eldest son of Prince Khalid. Prince Fahd had called Castle from Paris after weeks of silence. There had been intermittent static on the line as the two men spoke briefly, but Castle was able to make out that Fahd was giving him a green light for an investment in Iridium. The Saudis would like a chance to recover their original investment. (Although Fahd didn’t state a number to Castle, their total losses on two gateways would have been about $250 million.) The call caught Castle off guard since it was a belated response to a presentation earlier that summer at Castle Harlan headquarters—but he went into none of this during his call to Colussy. He simply said he was calling to help. “You know I’ve always been the biggest supporter of the Iridium phone,” he told Colussy. “I tried to do it myself, but it was outside the scope of my investment criteria. I couldn’t justify it to my partners.”
Colussy knew that Castle could do whatever he wanted with Castle Harlan money, partners or no partners, because he had an iron control over the voting shares, but he didn’t say that. Colussy also knew that Castle could have withdrawn from the Iridium effort without announcing it to the world, but he didn’t say that either. What he did say was “How can I help you, John?”
“I want to give you Prince Fahd’s phone number in Paris. It’s the only way to get to Prince Khalid, and I think he might invest.”
Did Castle feel guilty? Was this a peace offering? Colussy didn’t have time to ponder the imponderables. He just knew that, when it came to the Saudis, Castle always knew what he was talking about. Prince Khalid and another Middle Eastern investor named Sulaiman Olayan had jointly owned 22 percent of Donaldson, Lufkin & Jenrette when Castle was running it, and since 1975 the Prince’s son and three other family members had all trained under Castle as DLJ interns. Prince Khalid was such a private man that Castle had met him only twice during the two decades he worked with the family. Once was for dinner at the historic Saratoga Springs racetrack in Upstate New York, where the Prince and Castle both had horses running during the August resort season. And the second time was when DLJ was sold to Equitable Life Insurance Company in 1985 and Castle personally delivered Prince Khalid’s check for $180 million to the lobby of the Waldorf Astoria Towers. Castle knew the Prince to be a gentle, thoughtful man who was a rare bird in Saudi Arabia—a man with a royal pedigree who chose not to be involved in either oil or government, even though his wife was a full sister of King Fahd and his father had been an older brother and trusted advisor to Ibn Sa’ud, founder and first monarch of modern Saudi Arabia. Since the last time Castle saw him, Prince Khalid had become even more isolated and reclusive as his business passed into the hands of professional managers, but Castle had remained close to all Prince Khalid’s children and their extended families and especially to his former intern, Prince Fahd.
Colussy took down Fahd’s phone number and found himself softening a bit toward his old friend. Castle was just not a risk-taker, he thought. He was so ultracautious that he became his own worst enemy when it came time to make an actual investment. Colussy thanked him, got off the phone as quickly as possible, and immediately dialed Prince Fahd.
The prince answered his cell phone, acknowledged that he was expecting the call, then said, “I’m on the train, may I call you back?” It was the kind of phrase that strikes fear into a cash-finder’s heart, especially when dealing with the famously elusive Saudis. But, miracle of miracles, Prince Fahd did indeed call back a few minutes later.
“As you know,” he began, “my father had a very bad experience with Motorola, but we still believe a partnership is possible if the terms are right. I have strong faith in the Iridium system, and I know that John Castle has a strong confidence in your abilities. At this point we need to be made more comfortable.”
So Colussy proceeded to make him more comfortable, quickly reviewing his plans to buy the company out of bankruptcy, run it with the help of Boeing, and reconfigure the marketing goals so as to make it profitable. At the conclusion of the impromptu presentation, Prince Fahd said, “All right, that makes me very happy. That’s a very exciting proposition. The marketing is very important, and of course our advisors at Warburg will play a role for us. Could you by any chance meet us in London on Wednesday so that we can discuss this further?”
Wednesday was only four days away, and it was the day Motorola had announced to the world as the de-orbit day, but Colussy said, “Of course, I’ll be there.”
Instantly he dropped everything and put into motion plans to join Prince Khalid, Prince Fahd, and their armies of advisors at Cadogan Place in Knightsbridge, just off the gardens behind Harrods department store, where a town house functioned as Prince Khalid Central.
But that was the last time Colussy would ever speak to Prince Fahd. By the following day Prince Khalid’s majordomo, a punctilious, somewhat demanding lawyer named James Swartz, called to say, “No need to come to London. I’ll be coming to the U.S. We’ll talk there.”
Colussy was learning the first lesson of dealing with the Prince—namely that you never deal with the Prince. There were CPAs, lawyers, bankers, household employees, and all of them jealously guarded access to the Prince and the members of his family. The Prince himself was said to be a charming guy, capable of perfect English, always impeccably dressed in Savile Row suits—but few people had ever met him. “Of all the wealthy men I’ve met in my life,” said John Richardson, “he was by far the most pleasant of all.” But the Prince also preferred his investments to be anonymous. The important thing now was that his son had already gone on record, encouraging Colussy to seek an investment, and so the family’s word had been given. Everyone working for them accepted it as a fait accompli, but each now wanted to control it. James Swartz, the functionary intervening to make himself the chief intermediary between Colussy and the family, was in fact the ultimate insider. After graduating from Yale College, he acquired three law degrees (from Oxford, George Washington University, and the University of London), worked briefly for the venerable London investment bank Morgan Grenfell, then spent most of his life handling the Prince’s foreign investments. That job included managing the Prince’s residence in London as well as managing the financial aspects of 250 racehorses and 300 employees at six stables in Kentucky, England, and Ireland. Swartz actually lived in the Cadogan Place town house and had somehow acquired an English accent, although he was an American who had grown up in Farmer City, Illinois. From now on Colussy would deal with Swartz and anyone Swartz assigned to the Iridium matter—and he would assign many people.
Colussy knew that a Prince Khalid investment could still fall through, though, primarily because, in his opinion, the Prince’s advisors were determined to nitpick it to death. The sole exception was a pale, thin Australian named Tom Alabakis, whose job was to manage the original Iridium investment from the Middle Eastern gateway sales offices in Dubai. Alabakis was interested in seeing his job continue, so he flew to Washington to try to influence the deal, but his personal manner was abrasive, especially toward Colussy. Alabakis made it clear that the Prince didn’t invest in small-time operations—he invested with the blue-chip corporations of the world. He had a full-time Chief Financial Officer, David Hall, working out of his London town house. He used Price Waterhouse Coopers, the most prestigious accounting firm in the world. He had two lawyers—Steve Pfeiffer and Larry Franceski—on call at Fulbright & Jaworski, one of the largest law firms in the world. All of these people had to be convinced that reinvesting in Iridium was the right thing to do. Everyone employed by the Prince, from the guys at UBS Warburg to Swartz himself, kept insisting, “We have to partner with a major player.” By major player they meant Castle Harlan, or Craig McCaw, or Boeing, or anyone other than the company that was referred to simply as “Newco” because it had yet to be named. Anyone other than Dan Colussy acting alone.
Colussy was just starting to wade through the intricacies of the Saudi business world when he got an excited call from Herb Wilkins.
“We can get to Cohen,” said Wilkins.
By Cohen he meant Secretary of Defense Bill Cohen, the only guy in the world, aside from the President, who could invoke the national interest as a way of saving Iridium.
“What do you mean you can get to him?” said Colussy.
“I can get a meeting with Cohen.”
Colussy could hardly believe it. From that first meeting at the Pentagon, when General Jack Woodward confessed that he was not powerful enough to save Iridium on his own, Colussy had known that getting a military contract would be an uphill fight. “There’s support for Iridium within the Pentagon,” Mark Adams had told him, “but not that much support.” And the Pentagon didn’t move fast even when projects had universal support. Now Herb Wilkins had somehow landed an audience with the man who ran the whole building.
William Sebastian “Bill” Cohen was an odd duck in the Clinton cabinet, a former Republican congressman from Maine who had been drafted for the Pentagon job when Clinton was trying to move toward the center after winning reelection in 1996. Cohen was the sort of patrician New England moderate that had started to become a dying breed after the one-term administration of the first President Bush. At the time he became SecDef, Cohen was known mostly for being the only Latin scholar in Congress (Bowdoin College, 1962), the lawyer who drafted the 1984 Competition in Contracting Act to eliminate Pentagon waste, and, as far as anyone could remember, the only SecDef in history who was also a published poet. This latter skill didn’t seem very suited to the personality of a warrior, especially when you consider his staggered meter decrying the Strategic Defense Initiative:
Before they unleash
hurricane winds,
Before they breathe
through nostrils red
beyond all Fahrenheit,
Turn them to endless
ash, yes, save us from
their savagery.
But that was a poem about war satellites—maybe this pacifist warrior had a soft place in his heart for the peaceful satellites of Iridium. Besides, Cohen had no more time for poetry. He had become better known as the guy accused of running interference for the Monica Lewinsky sex scandal, first by firing missiles at terrorist camps in Afghanistan one day before Lewinsky’s testimony, then for bombing Iraq one day before the President’s impeachment hearing. The only reason any of this mattered at all was that Cohen had been reamed by the press several times and was unlikely to touch anything controversial. But Wilkins had a secret weapon.
“First of all,” he told Colussy, “Cohen is a Democrat in Republican clothing. He’ll want to help us. More important, his wife works for Bob Johnson.”
And indeed, as Colussy was soon to learn, Cohen was married to a flamboyant television diva named Janet Langhart, now Janet Langhart Cohen after the Secretary became her third husband in February 1996. The former Ebony Fashion Fair model was finishing up a long broadcasting career that began as the weather girl at WBBM in Chicago in 1966, continued with regional morning-host jobs on Indy Today and Good Day in Boston, and included stints as a spokeswoman for Avon Cosmetics and a correspondent for Entertainment Tonight before Bob Johnson brought her to BET. She’d made her presence known at the Pentagon, first by masterminding a $52,000 redo of her husband’s office, then by anointing herself “First Lady of the USO” and printing her new nickname on personal stationery—until the head of the USO complained to Cohen and she was told to stop. She also created, produced, and hosted Special Assignment, a weekly television program that aired on the Armed Forces Network during her husband’s tenure as SecDef. Herb Wilkins didn’t come right out and say it, but the implication was that Bill Cohen would listen to Janet Cohen, and Janet Cohen would definitely listen to Bob Johnson. Even though Johnson had decided not to invest, Wilkins had prevailed on their long-standing friendship. The Syncom guys had known Johnson ever since he was an obscure lobbyist for the National Cable Television Association in the seventies, coming to Ty Brown to ask for assistance in getting things through the FCC. The bottom line: Come to Bob Johnson’s office—he can fix everything.
And so it was that, on August 8, twenty-four hours before the publicly announced de-orbit, Colussy found himself sitting in the waiting room at the Pentagon with Ty Brown, Herb Wilkins, and the genial Bob Johnson. They had all come from BET headquarters in Johnson’s limo and would return there later to rehash the events of the day. They cooled their heels for a good part of the morning, as people tend to do when they’re waiting for an audience with the cabinet member charged with the defense of the free world, but once the young officer escorted them on the long walk to Cohen’s inner sanctum, it went off like any other meeting. There was the usual chitchat, and then Bob Johnson took control.
“Bill,” he said, “we need your help.” And he nodded toward Colussy. “Dan, would you fill in the Secretary?”
Cohen then listened patiently as Colussy began outlining the situation, emphasizing the indemnification problem, the hostility of Motorola, the support for the Iridium phones on both the civilian side in the form of the CIA and the DEA and the military side in the form of the Air Force and Marines, and making the point that, even as they spoke, Motorola was threatening to de-orbit the constellation within twenty-four hours.
“Well, I’ve certainly heard about this situation,” said Cohen at last. “And what you’re saying makes a lot of sense. I’ll look into it.”
There was a pause. Colussy added a few pertinent facts. Cohen seemed to be mulling it over.
“So you need me to say that saving these satellites is in the national interest,” he said.
Was it a question? Colussy decided to answer it: Yes, that would certainly help.
“And . . . it is in the national interest, correct?”
Colussy assured him that yes, it certainly was.
“I’ll get back to you one way or the other,” said Cohen.
As they made their way back to BET headquarters to get their cars, the men agreed that the meeting had gone well, but they probably didn’t know how well.
An hour later, the phone rang in the Pentagon office of Dave Oliver, whose official title was Principal Deputy Under Secretary of Defense for Acquisition, Technology and Logistics. His unofficial title was “the Fixer.” It was Secretary Cohen on the line, and his message was clear: The President wants Iridium saved. The reason is that he thinks the system would be useful for the economic development of Africa, providing phone links between villages, but that’s not a good enough reason for Pentagon intervention. Your job, Cohen told Oliver, is to find a reason the military can’t live without Iridium. And do it now. Oh, and one more thing: you can’t use the President’s name. He doesn’t think he should be directly linked to this effort.
It was not uncommon for Dave Oliver to get a call from the Secretary, but it was rare for him to get one with this degree of urgency. As the number five official on the civilian side of the Pentagon, Oliver was known as a bulldog—the guy who could cross any line and bring together any warring factions. When General Woodward told Colussy he didn’t have enough juice to save Iridium on his own, he was hoping the case file would pass to someone exactly like Oliver. Oliver had spent thirty-two years in the Navy, retiring as a two-star Admiral after running the nuclear attack submarine program during the Cold War and then the Navy space program in the eighties. He then spent several years working for Westinghouse and Northrop Grumman before coming back to the Pentagon on the civilian side, partly because he believed in Bill Clinton. He liked to compare Clinton with Admiral Elmo Zumwalt, with whom Oliver had served in Vietnam—the kind of leader who wasn’t afraid to be unpopular in the present when he had a clear vision of what needed to be done for the future.
Oliver, like Clinton, was willing to run against the conventional wisdom—and Dave Oliver loved the Pentagon. He was a true believer, an appellation sometimes used derisively, but in Oliver’s case usually spoken with respect: he honestly thought what he was doing was important to the free world. And there was one more thing about Dave Oliver that made him perfect for the Iridium situation: his specialty was the dirty job. He had smuggled arms into Israel in the eighties, keeping everything under the radar. After the Soviet Union crumbled, it was Oliver who got the nuclear weapons out of Kazakhstan. He headed a secret mission that located ninety-two Scarp ballistic missiles and two thousand pounds of enriched plutonium, then found a way to bring everything back to the United States. (“We fueled Detroit with it,” he said later, without irony.) Oliver was used to keeping secrets and dealing with brinksmanship situations—skills he learned as a nuclear submarine commander in the Sea of Japan, where he frequently played chicken with the Soviets, and then honed while handling every kind of secret backdoor assignment since then. He thrived on this stuff.
Secretary Cohen knew Oliver could work fast and get results, because one thing he’d heard loud and clear during the Colussy briefing was the time element: this had to get done before Motorola destroyed the satellites. It was a threat that Oliver was slow to accept. He thought the de-orbit deadlines were simply negotiating tactics—“but then I learned real quick to take them seriously.” He decided he needed to somehow neutralize Chris Galvin, so he placed a call to The Tower, leaving the message that he had been assigned to the Iridium problem and was hoping Galvin would help him “get up to speed on it.” But Galvin was in no great hurry to get back to him. “Not the most dynamic guy in the world,” Oliver said to colleagues, “and every time I try to call him, he’s at a party.”
It took a day or two, but Oliver did get up to speed on Iridium, and what he discovered served to motivate him even more. Like most people who studied the engineering of the Iridium constellation, he was in awe. The Motorola handsets, on the other hand, were “dogmeat.” If the system was going to be saved, it would need new handsets, but Motorola didn’t want to make any new ones. “I could also see that in a couple of generations the Iridium system was going to be really, really good,” he said. “So I thought a big company would want to buy it. If you were a big company, and you took over Iridium, you could blame all these current problems on a previous chairman, and in fact Chris Galvin was a great guy to blame it on. But that wasn’t happening.”
In other words, Oliver was stuck with Dan Colussy, Herb Wilkins, and whoever else showed up on the “Newco” side. He was not in control of that, though, so he proceeded on the assumption that someone would buy it. He just had to make it easy for that someone to make it survive, hopefully with a government contract. Oliver was an old hand at Pentagon politics, so his first effort was devoted to building support within the Building. That meant physically walking from office to office, talking to every service branch and especially the senior communicators. “Wouldn’t you like to have this system for nothing?” was his message to all of them. And all of them gave him the same answer: No, not interested. These were the stovepipers Jack Woodward had warned about.
Increasingly disgusted, Oliver found himself going higher and higher in the hierarchy—after all, he had carte blanche from the SecDef to get this done—and one day he happened to see the Vice Chairman of the Joint Chiefs of Staff leaving his office. Oliver hustled over and collared him in the hallway. He then launched into a passionate pitch for the Iridium phone, telling him how they could take the existing device, “amp that baby up and have connectivity in places we’ve never had it before.”
The general was unmoved by Oliver’s pleas.
“The phone is a piece of crap,” he said. “We don’t need it.”
“You dumb fuck,” said Oliver, and turned on his heel.
Both men had been speaking loudly, so Oliver walked across the hall to the office of Hugh Shelton, the Chairman of the Joint Chiefs and, more to the point, a decorated Green Beret in Vietnam—exactly the kind of Special Forces soldier who would be apt to use an Iridium phone.
“Did you hear that conversation?” asked Oliver.
Shelton said that he had.
Oliver asked him if there was any reason the Pentagon shouldn’t take advantage of the only truly global handheld satellite phone system ever put into space. And the chairman said he didn’t see any reason why the government wouldn’t do that.
“I’m going to take that as a yes,” said Oliver to the highest-ranking military officer in the United States, “and I’m going to run with it.”
“Fine,” said Shelton.
But Oliver very quickly picked up on the major fear of both Motorola and the government—that a de-orbit of the constellation, even if delayed for years, would create a nightmare scenario of burning satellite components crashing to Earth and killing people. Oliver had university-level training in statistics and ran the numbers himself, concluding that the NASA study estimating a 1 in 249 chance of injury was ridiculous. “But it was out there and I couldn’t destroy it,” he said. “I couldn’t get rid of that stupid number, and the fear was real, the fear was tangible.” It wasn’t that the government cared that much about falling space junk—168,000 kilograms of space debris already entered the atmosphere every year—but everybody cared about the kind of debris that gets attention.
Bureaucrats have a long memory for anything that makes headlines. In 1978 and 1983 there had been crashes of Russian spy satellites with radioactive components aboard, one of them strewing debris all over northern Canada. The Salyut 7 space station had gone into premature orbital decay in 1991 and hit a town in Argentina, panicking the local population. Most famous of all was Skylab, the space station that broke apart in 1979 and plummeted to Earth in Western Australia, creating an international media event and comedy fodder for radio disc jockeys the world over. (The Australian ambassador to the United States presented Jimmy Carter with a ticket for littering.) But these events were rare. Most of the fourteen thousand reentries ended with a quiet plop into the ocean.41
Oliver eventually gave up on the statistical analysis altogether. He had worked for years with nuclear submarines and knew that, no matter how safe you could prove them to be with numbers, the word “nuclear” made people irrational. He had to face the fact that the words “crashing satellites” had the same emotional effect. So he started using the following argument instead: Every time an airliner takes off, that plane is insured for seventy bucks against things falling off it. Why? Because things fall off airplanes all the time. Yet here are all these insurance companies competing for this business, and we’ve all seen airliners flying over cities. There are many parts that can and do fall off airplanes, but there is only one part from each of these sixty-six satellites that can reach Earth, and when it does reach Earth it will probably be microscopic. So the value of the insurance should be much less than seventy bucks per satellite. Add to this the fact that 70 percent of Earth is water. A bunch of it is desert. A bunch is like Northern California—it’s land but nobody lives there.
This folksy argument eventually carried the day with most of the people Oliver had to convince, and he even found a promising rivulet of support: the officers in charge of Command, Control, Communications and Intelligence, or “Three See Eye.” People like Jack Woodward. People like Colonel James Mattis, senior military assistant to Rudy deLeon, the Deputy Secretary. DeLeon was the ultimate powerbroker inside the Pentagon and the person Oliver most wanted to convince. Unfortunately, that was going to be a tough sell. DeLeon was a civilian and a classic Pentagon politician, and after “taking the temperature of the Building” on Iridium, he was not inclined to help. That’s why Oliver went to work on deLeon’s assistant, Colonel Mattis, who had been a front-line war-fighter, the commander of the Seventh Marines, and the leader of a rifle company, a weapons company, and an assault battalion called “Task Force Ripper” in Operation Desert Storm. Oliver’s best friends in the Building were people who had been in the trenches—and they wanted that handheld satphone! But in the meantime he had to find a law authorizing the Pentagon to do what he wanted—accept liability for the safety of the satellites.
It’s not clear exactly who unearthed Public Law 85-804. Dorothy Robyn first heard about it from Rick Stephens, head of the space communications division at Boeing, who said it was used all the time for rocket launches. (“That’s when the lightbulb went on in my head,” said Robyn.) Colussy was aware of it, remembering the time during the Vietnam War when the government agreed to indemnify Pan Am. He had passed along that suggestion to Isaac Neuberger, his personal attorney, who was working virtually full-time now on figuring out how to buy Iridium, and Neuberger had passed it along to lawyers in the White House. As luck would have it, one of those lawyers was Linda Oliver, wife of Dave Oliver, who worked in the Office of Federal Procurement Policy. So Dave told his wife to stand by, he was going to need her for a special assignment.
The call Dave Oliver was waiting for—from Chris Galvin—finally came on a Friday night while Oliver was attending a wedding. He had left numerous messages for Galvin and felt like he was being ignored, so he excused himself from the ceremonies and picked up the call. Then he got right to the point.
“I need to meet you in your office tomorrow,” he told Galvin.
“Tomorrow is Saturday.”
“I need to meet you in your office tomorrow. It’s very important to the government.”
The next day, Dave and Linda Oliver took an early-morning flight to Chicago and a cab to The Tower. They were quickly ushered into Galvin’s office, and again Dave Oliver was abrupt.
“Look, if I can get you immunity from lawsuits, will you give me this thing?”
Galvin hesitated, then suggested that perhaps Oliver’s wife would like to wait in the outer office while they talked. Oliver didn’t like his tone. It sounded like he was suggesting “the little woman can read some magazines while the men are talking.”
“That wouldn’t be a good idea,” said Oliver. “She works at the White House. She’s the number two person in federal procurement policy. I brought her here because only she can sign off on this.”
Galvin then proceeded to tell Oliver how expensive it was to keep flying the Iridium constellation and how unfair that was to Motorola. Oliver kept reemphasizing why he was there: Will you play ball with us if we get you a solid buyer? But Galvin said he’d already been through that—there were no buyers. Oliver said he could probably come up with a government contract that would bring some new buyers out of the woodwork. Galvin pushed back again, saying he had already wasted too much time. And then there was the insurance issue—Galvin didn’t want Motorola to get sued, and destroying the satellites now meant his company would be fully covered. Oliver said he would get him the same insurance, somehow, someway. “Will you play ball with me?” he repeated. An hour later, Oliver had an agreement in principle with Galvin, but Galvin wanted it in writing. He wanted a decree, or an authorization, or a letter, or whatever document Oliver could produce for Galvin to take to the Motorola board of directors. Oliver said fine, he’d get it.
But he couldn’t get it. At least not immediately. When Oliver got back to Arlington and placed calls to his counterparts at the Justice and State Departments, he was not happy with what he heard. Lawyers working for Attorney General Janet Reno and Secretary of State Madeleine Albright were skeptical. It sounded like a corporate bailout. They were not sure it was legal. Not only that, the Iridium Interagency Working Group had been laboring for five months to force Motorola to do exactly the opposite—buy additional insurance to indemnify the government! The committee preparing for the Mir de-orbit had been so disgusted by government exposure to a private initiative that it had been studying the issue with an eye toward requiring all corporations in the future to buy additional insurance especially to indemnify the United States. Now the government was supposed to give them insurance? Oliver still had a lot of work ahead of him.
In the course of his full-court press, Oliver discovered his old friend Dorothy Robyn was already on the job at the White House, and he knew right away that she would understand—that this was a war where they were going to need to cross lines and kick ass. Oliver told her there were logjams in the Building, and he wasn’t sure he could get past the cautious Deputy Secretary Rudy deLeon. “Let me assist on that,” she said. “I’ll get Gene to call him.” But Robyn was worried on other fronts, she said. She was following the Colussy negotiations through reports from Tom Tuttle, and he had told her that Motorola had turned flaky. “It will seem to be going well,” Tuttle told her, “and then in classic Motorola style, they ask for more. Two executives keep coming up with more and overruling the negotiating attorney.” Those two executives, she had found out, were Motorola attorneys Bruce Ramo and Kathleen Massey. Both seemed spooked by the idea of the Colussy group taking over the system and then being unable to manage it. Mike Kennedy, one of the Motorola lobbyists, had been especially blunt. “It’s not about money,” he told her. “It’s a legacy problem for us. We’re being hit hard by the Wall Street analysts. The company would very much like to keep the Iridium system going, but we’re fighting this mind-set. It’s about finding a replacement company that can keep the system up there but distancing ourselves from it so Wall Street won’t continue to hammer us.”
Meanwhile, Colussy continued to field thirty to forty calls a day from the Iridium war room in Glen Oban, Maryland. Many of those were strategy calls with Isaac Neuberger. Neuberger had tapped into his network of rabbis and—as luck or divine intervention would have it—found a personal friend who worked as outside counsel for Motorola in Chicago. Neuberger now knew every move Motorola made, which created some confidence that, as each day began, they could at least know whether the de-orbit had been ordered or not. Also helping was Dannie Stamp, the Motorola employee who had supervised the launch of the constellation and who had already made it known to Colussy that, if the satellites were saved, he would like to work for the new company. Slowly Colussy was building a team, and what all the players had in common was shock and outrage that Motorola might bring the constellation down.
When the August 9 de-orbit deadline passed, Colussy assumed it had been yet another example of Keith Bane crying wolf. Ted Schaffner didn’t even mention it in his daily phone call to Colussy, and Colussy didn’t bring it up either. He told Schaffner he would be ready to close, with all his investors in place, no later than August 31. He was nowhere near being ready to close, but he felt he had to tell Motorola whatever Motorola wanted to hear.
Fortunately the Japanese were acting friendlier in regard to a deal. In this case the go-between was Yoshiharu Yasuda, the former President of Nippon Iridium, who had a good working relationship with both Ed Staiano and Tom Tuttle, and Yasuda-san was working hard to bring aboard Kazuo Inamori. At last Colussy got the breakthrough call he was waiting on: Inamori would be at the offices of one of his companies in Irvine, California, on August 22, and he would be happy to meet with Colussy and hear his ideas. Colussy immediately started making travel arrangements. But then Ed Staiano called from somewhere in Pennsylvania to say, “I hear that pressure is building in The Tower. Call Keith Bane.”
When Colussy did call, Bane was curt and to the point: “Should we de-orbit now or risk continued operations?”
Colussy had been through this dance before. “Everything is almost finished, Keith. We’re less than two weeks away.”
“I want a letter from Boeing telling me that they are responsible for everything.”
“I thought we’d been through that.”
What was going on? Kathleen Massey, Motorola’s senior litigation counsel, had been at meetings in London with Isaac Neuberger, the underwriters, and Boeing lawyers, and all the details had been hammered out to make Motorola happy. Why was Bane going back to this tired refrain of wanting indemnification from Boeing? The insurance was in place. It was more insurance than Motorola had ever bought. It was more insurance than was needed. It was as much insurance as any company would ever write on any satellite constellation.
“From our standpoint,” said Bane, “there’s no reason to take any risk. We’re the manufacturer. Manufacturers of guns get sued. Manufacturers of tobacco get sued. The reason companies take a risk is to make money, but there’s no money to be made here. Right now we have an advantage because we have a mass de-orbiting policy that’s good for eighteen months. We benefit from a policy written for Iridium that was a mistake. It’s broad and it includes all liability. But the message we’re getting is that the insurers have learned from Iridium and they don’t want to be stuck on this. That’s why your policies are not as broad. Last year Motorola wrote off $2.119 billion, and we’re continuing to pay $2 million a week, and no one wants to help us pay for this.”
Bane had turned the call into a lecture on Business 101, and Colussy didn’t like his tone. He was silent, letting Bane go on for a while, and then finally agreed to talk to Boeing one more time.
After a few minutes they conferenced in Rick Stephens, Vice President and General Manager of Boeing’s space communications division. Stephens—a veteran Boeing executive, an ex-Marine, and the tribal chairman of the tiny Pala band of Luiseño Mission Indians—had been talking to Motorola for several weeks, and he knew this conversation was going nowhere. (“Keith Bane and Ted Schaffner kept saying to me, ‘Rick, you have to indemnify us or this is not going to work. Get it off our plate! Get us out of this!’”)
Stephens repeated that Boeing had accepted liability for everything it could accept liability for.
“Your company is thinly capitalized,” said Bane to Colussy. “Your business plan is not demonstrated. I have to assume, Rick, that Boeing wants the satellite business to be successful. What you’re doing can be a road map for the next generation of satellite systems. I know you want success for the launch industry. The way you can be certain to do that is to get me this indemnification.”
“I can’t do that, Keith. Not what you’re asking for. You want us to pay for everyone’s mistakes including yours. No one can do that. We could be sued if we did that.”
“Tell me what you can do.”
“Okay, I’ll ask Harry.”
When they hung up, Colussy was troubled but not that troubled. The most annoying thing about the whole conversation was that it was going over issues that had first come up six weeks earlier and had already been disposed of.
And then, two days later, on August 22, Schaffner called with the bombshell:
The Motorola board had just ordered Chris Galvin to destroy the constellation.
Motorola was giving formal notice to the government.
It could happen within forty-eight hours.
There was nothing anyone could do to stop it.
Iridium was finished.
Schaffner expressed no emotion as he ticked off the points.
Just like that, it was over. Prince Fahd didn’t matter. Prince Khalid didn’t matter. Secretary Cohen didn’t matter. Public Law 85-804 didn’t matter. Nothing from the White House or the Pentagon or anywhere else had made the slightest bit of difference. Nothing mattered except the single-minded determination of Motorola to get what it wanted and everyone else be damned. All the work, all the accumulated goodwill, all the promises of help had come to naught. Iridium was history.